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2018-05-15 15:23:19

ADP

ADP

$126.88

0.2 (0.16%)

15:23

05/15/18

05/15

15:23

05/15/18

15:23

Two more activists building stakes in ADP, WSJ reports

Two activist hedge funds, D.E. Shaw Group and Sachem Head Capital Management, have built small stakes in ADP, as the payroll-processing company tries to jumpstart growth, according to The Wall Street Journal, citing people familiar with the matter. The two investors have not decided whether they would try to push for changes at the company, but they have met separately with ADP's management and are closely tracking its performance, sources said. Reference Link

As reported earlier, RBC Capital analyst Gary Bisbee upgraded ADP to Outperform from Sector Perform and raised his price target to $130 from $119. Bisbee cites an "improving growth story and more reasonable valuation", saying that the past headwinds and slower bookings are being "lapped". The analyst also expects earnings growth to accelerate to teens rate, boosted by the benefits of tax reform and higher margins. Bisbee adds that ADP's June investor day could be a potential catalyst toward a stronger outlook as consensus estimates for FY19/FY20 "look low".

BofA/Merrill analyst Jason Kupferberg reiterated a Buy rating and $138 price target on ADP shares, while adding it to his firm's U.S. 1 list. The analyst believes ADP has an underappreciated margin expansion story and continues to believe the risk/reward remains attractive.